MEMO: Report to Senate on Actions to Address Issues Raised on Investments and Partnerships | Freedom of Expression

To:	Members of Senate
From:	Vivek Goel, President & Vice-Chancellor
Date:	Friday, May 31, 2024
Subject:	5(a) Report to Senate on Actions to Address Issues Raised on Investments and Partnerships

Dear Senators,

What follows was going to be part of the President’s report scheduled for the June 10th Senate meeting as a follow up to the May Senate questions raised about how Waterloo approaches investments and partnerships.

In light of issues raised with respect to the Special Senate meeting, it is presented here.

For several months, members of the University community have raised and discussed issues related to the ongoing situation in the Middle East. The University acknowledges the pain that members of this community are experiencing about what is happening in Gaza and Israel, and victims of armed conflict everywhere.

Following several months of student protest activity, representations to both the Board and Senate, and questions raised by members of both governance bodies, Senate was informed on May 6 (later shared in the Daily Bulletin on May 9) that the University would start work to review institutional investments in line with its responsible investment policy and within appropriate governance bodies, and that the University would review its approach to international partnerships.

This proposed work should build on the work of the Task Force on Freedom of Expression and Respectful Engagement which is set to report over the summer and consider the proposed institutional values.

The University will take three specific actions. It will:

take steps to improve transparency on institutional investment portfolios by disclosing the names of direct investments and the investment manager and fund names for actively and passively managed pooled investment funds for the endowment and the registered pension plan;
form a Task Force on Social Responsibility in Investing to review the University’s Responsible Investment Policy and related policy framework with a lens on social factors including international human rights and diversity, equity and inclusion, as well as consideration of further disclosure practices and processes for the community to bring forward expressions of concern; and
form a Task Force to review our current practices in establishing institutional partnerships and develop recommendations on a unified framework for principles for partnerships across all institutional portfolios that reflect Waterloo’s values.

Further information on these actions follows. Invitations to participate in both task forces will be issued following the June 10th Senate meeting.

In addition to addressing the questions raised by the community, senators and board members, the University believes these actions are reasonable next steps to address the calls for action made by members of the current protest encampment. Senior administrators have been in dialogue with members of the encampment to inform them of this approach.

This approach is grounded in a drive to increase transparency and to center the voices of the whole community in the institution’s actions. This builds on the models that have recently been used to create positive change at Waterloo including the President’s Anti-Racism Taskforce and the Task Force on Freedom of Expression and Respectful Engagement.

Background on Waterloo’s responsible investing approach

At the April 2024 Board meeting, there was a request for the Finance & Investment (F&I) Committee to review and provide an update to the Board of Governors on the ethics of the University’s investments. This request came forward within the context of prior work conducted to review institutional investments.

In June 2021, the Board affirmed climate change mitigation as a priority area among Environmental, Social and Governance (ESG) factors requiring focused investment attention relating to its impact on the financial performance of investments. Through that work, the Board approved a carbon footprint reduction plan for the endowment and pension funds where progress is reviewed annually. 

The Board approved the University’s Responsible Investment Policy in 2022 which forms part of a broader responsible investing framework that includes ESG guiding principles and their application to University investments. This framework also uses the United Nations’ Principles for Responsible Investment and the Responsible Investment Charter for Canadian Universities, to both of which the University is a signatory.

The Board also recognized that further consideration was required relating to other ESG factors such as social justice, equity, diversity and inclusion and their potential consequential impact on investment risk and reward. This was documented in the Responsible Investment Policy.

The Board and its Committees apply ESG factors as part of investment decision making processes and the decision to integrate ESG factors into investment decisions is based on the belief that this approach is expected to enhance the long-term value of the funds’ portfolios and reduce the risk of loss. Furthermore, the University considers investment manager integration of ESG in selecting fund managers.

The F&I and the Pension Investment Committee (PIC), both committees of the Board of Governors, regularly discuss responsible investment matters. At the Fall 2023 retreat, F&I discussed ESG and future directions for responsible investing. In the March 2024 meetings, F&I and PIC considered the responsible investment action plan and progress on work on this plan. The Board and its Committees have a fiduciary responsibility with regards to the investments and must ensure that legal requirements are met.

Increasing transparency on investments

As a result of this ongoing focus on responsible investment practices, the administration recognizes that information on University investments is difficult to access and acknowledges that it does not currently disclose the investment holdings within endowment or pension funds in a way that is easily accessible.

As part of the commitment to be more transparent with details of investments, the F&I Committee on May 30 accepted a proposal that the University will undertake a process to transparently disclose the names of direct investments and the investment manager and fund names for actively and passively managed pooled investment funds for the endowment and the registered pension plan.

This effort to increase transparency is not the end of this work. As the majority of university investments are in institutional pooled funds managed by third-party investment managers, consideration of whether and how to approach disclosures of holdings within pooled funds is further work that the University will ask the Task Force proposed in the next section to consider.

Task Force on Social Responsibility in Investing

It is essential that efforts to increase transparency are systematic. Changes that the University community is calling for require us to establish mechanisms to deal with requests for change now and long into the future.

To help the University achieve this, a Task Force on Social Responsibility in Investing is being established. This task force will, among other things, consider approaches to disclosing investments in pooled funds, examine ESG factors including international human rights, and make recommendations on matters related to receipt of expressions of concern in relation to the University’s investments.

This task force will include representation from faculty, staff and students and the Board of Governors. An open call for members with appropriate expertise will be issued. Community members will have an opportunity to make representations to the task force and participate in its consultations which will be supported by subject matter experts through the Fall.

The process to reach the objectives including broad consultation will ideally be concluded by the end of the 2024 calendar year, culminating in a report and recommendations to the President. The Task Force report and administrative response will be publicly posted.

Changes to policies will be considered by the F&I and PIC, as those committees ultimately have responsibility for proposing to the Board of Governors any revisions to the Responsible Investment Policy or the Statements of Investment Policies and Procedures.

Task Force on Principles for Institutional Partnerships

Community members have raised concerns about the way the University enters into formal institutional partnerships.

Although the University has a robust process for assessing institutional partnerships (including Policy 7 - Gift Acceptance), it is acknowledged that it would be useful to clearly articulate the principles that guide decisions about partnerships. This includes partnerships that the University enters with other legal entities, such as university-to-university international agreements, university-funder agreements or institutionally stewarded advancement relationships. Responsibility for individual partnership agreements is delegated by the Board of Governors to the administration.

A Task Force on Principles for Institutional Partnerships will be established to build on several key foundations recently set – or soon to be set. These foundations include Waterloo’s ongoing commitment to equity, diversity, inclusion and anti-racism, the vision for Waterloo at 100 and new institutional values set to be considered by the Board in June. They also include principles soon to emerge from the Task Force on Freedom of Expression and Respectful Engagement as well as recent government directions on safeguarding research.

The task force will conduct extensive community consultations this Fall with students, faculty and staff to develop a set of principles to ensure a clear and consistent approach to institutional partnerships that reflect new institutional values.

Although the scope of this task force will not cover individual researchers’ bilateral relationships, it is important to note that some institutional research agreements arise from the activities of an individual researcher, and these will need to be considered by the task force.

This task force will include representation from faculty, staff and students. An open call for members will be issued. Community members will have an opportunity to make submissions to the task force in addition to participating in consultations.

Change movements need time and stakeholder input

It’s important to note that while all this work is underway, the timeline for making decisions about university investing policies and partnership agreements will take much longer than some may like. We operate through a collegial, shared governance model which lays out the processes by which change must happen.

These decisions are complex and will impact the institution for decades to come and therefore require time and feedback from all stakeholders. This is particularly important when we face issues for which members of this community have many different perspectives.

The University of Waterloo Act defines our objects as “the pursuit of learning through scholarship, teaching and research within a spirit of free enquiry and expression.” Ensuring that there is room for a broad range of dialogue and debate is central to our purpose.